Young, Smart, and Broke

Millennials are smarter than us. They are. There is no question. So it is unsurprising that a host of millennial financial independence voices have sprung up and gained prominence in our burgeoning community. The future lies in the hands of the young, and many are learning from the missteps of their progenitors, and forging their own radically modified and shortened path to financial freedom. Although young, smart, and broke now, the situation will soon remedy itself. Whether they came upon this pathway independently, or are second generation FI, I think there are a few unmodifiable truths that those of us who took the more traditional route can pass on to them.

Retirement in your twenties or thirties sounds quite luxurious at first pass. Traveling the world, getting out from under the thumb of the man, and living life by your own internal rhythm sounds glorious. I tip my hat to you.

I, however, would have been both unsuccessful and miserable if I walked this path.

Here’s why.

Retirement? What?

Retirement is not a goal. It’s a goal post. It’s a street sign on the superhighway of life. When your end game is to escape something unenjoyable, the journey leads neither to happiness nor fulfillment. It leads away from sadness.

Coming out of college, retirement was never even on my radar. I figured I would happily work to an old age. Those younger years were full of passion and hope because my goal was concrete and palpable. I wanted to be a doctor. I wanted to help my fellow man.

This inner drive was going to propel me to success no matter what profession I chose. The passion and joy are what made life fulfilling. Although mid-career, my goals have changed, I wouldn’t erase all that hard work for anything.

If your goal is solely financial independence or early retirement, I think you may find your destination quite empty upon arrival.

I would suggest pursuing fulfillment in whatever form that comes to you, and then building both an income and a path to FI around that fulfillment. If it takes a decade longer, who cares? You’ll be enjoying yourself.

When your young, smart, and broke, you have all the time in the world.

Front-Load The Sacrifice

In this blog, I have mostly stated the obvious. I write things that I believe are somewhat self-evident. Yet, if you are going to take one piece of advice, it should be this: front-load the sacrifice.

The formula is simple. Work really hard and save a lot of money between the ages of twenty and thirty. Then you should invest wisely, and be somewhat frugal. If you do these things, you will never have to worry about money again The power of compounding will solve most economic problems. The earlier you start, the better.

If you waste this first decade dreaming of financial independence but accomplishing little, your road becomes much steeper.

It’s such a big mistake not to bust your butt when you are young, have the energy, and don’t have the responsibilities of children. I know this is not what many want to hear, but the world sometimes looks different as you get older. You can’t turn back the clock.

You may be young, smart and broke now. Don’t end up old, smart, and broke. Do your due diligence.

Life is Long

If you are lucky, life is long. You need a large amount of jet fuel to propel you through the decades. While passive income is great, sixty years of retirement is a touch expensive. There is no way to know what economic, health, and emotional barriers you will face. There are so many financial questions that are impossible to answer when you are young:

Will you decide you want ten kids?
May a health issue get in the way?
Will the economy tank to unfathomable lows?
May you one day be sad that you didn’t pursue a career or business?

The problem with unknowns is that they are unknowable. Certainly, the reverse argument is also true. Since you may die tomorrow, why work today?

My answer is simple. Find life-affirming work if you can. Then make it profitable. Cover all bases.

Final Thoughts

Young, smart, and broke is a good place to be. But it is momentary. While you will always be smart, youth is fleeting. Don’t stay broke forever.

In my humble opinion, ditch the idea of retiring early. Find something you are passionate about and build an income stream and life around it. Live frugally, invest, and let compounding do all the work.

Front-load the sacrifice. Really, I mean it!

Don’t let this opportunity pass.